The 4 Best Multifamily Loans in 2025
Which multifamily loan is best depends greatly on your unique situation, but we outline four top contenders for the year.
- Fannie Mae Small Loans
- Pros of Fannie Mae Small
- Lower Interest Rates
- Higher LTV Allowances
- Relatively Fast Approvals
- Cons of Fannie Mae Small
- Limited Loan Amounts
- Occupancy Requirements
- Bridge Loans
- Pros of Bridge Loans
- Short Loan Terms
- Fast Closing Times
- Asset Based
- Cons of Bridge Loans
- High Interest Rates
- Short Loan Terms
- HUD 221(d)(4) Loans
- Pros of HUD 221(d)(4) Loans
- Low, Fixed Interest Rate
- Available for Most Properties
- Fully Amortizing
- Cons of HUD 221(d)(4) Loans
- Lengthy Approval Timelines
- Only for Construction
- Bank Loans
- Pros of Bank Loans
- Smaller Amounts
- Relatively Fast Close
- Flexibility
- Cons of Bank Loans
- Every Bank Is Different
- Related Questions
- Get Financing
If you want to refinance an apartment building, there are plenty of options out there. The same thing goes if you’re looking to buy a multifamily property or even build one.
Whichever you’re planning to do, you will likely need financing. While interest rates have started to gradually come down late this year, it's still really, really important to pick the right financing option for your project.
How do you do that?
Start with our list.
We’ve highlighted four excellent loan products that make great sense to use — especially now. Of course, not all of them will be the perfect fit for your specific situation, but they make a great starting point to fully understand your options.
Once you're done, get a free quote from us. Regardless of your investment strategy, we can match you with the best financing for your situation.
Fannie Mae Small Loans
Fannie Mae Small Loans are a great option for many borrowers, regardless of your level of experience in multifamily investing. They have competitive rates, relatively fast closing timelines, and a streamlined application process.
Pros of Fannie Mae Small
Lower Interest Rates
At a time when rates are still higher than they’ve been in a while, Fannie Mae Small’s rates have also increased — but not by as much compared to your average bank loan. Many borrowers can lock in a fixed rate for the life of a loan, which can be a huge boon for your property’s financials.
Higher LTV Allowances
Fannie Mae Small allows loan-to-value ratios of up to 80%, significantly higher than what most banks, credit unions, or life companies will allow. This higher leverage can free up significant investor capital to go towards other acquisitions or even capital improvements at your property.
Relatively Fast Approvals
Fannie Mae Small Loans are not the fastest-closing apartment loans out there, but they’re faster than most. The majority of these loans can be closed in between 45 and 60 days, though delays can occur.
Cons of Fannie Mae Small
Limited Loan Amounts
Any loan through the Fannie Mae Small program is capped at $9 million. While this amount is often enough for most smaller apartment building owners, it may not always be enough for mid-sized properties in high-cost markets or for larger communities.
Occupancy Requirements
Generally, these loans require that your property has had a stabilized physical occupancy rate of above 90% for the 12 months prior to closing. If you have a building in its lease-up phase, then, this may not be the right choice for you.
Bridge Loans
Bridge loans are more a category of financing than a specific loan instrument, and terms can vary wildly from one lender to another. However, they generally are geared for investors who need financing for a short term — to cover a gap between construction and permanent financing, for example.
Pros of Bridge Loans
Short Loan Terms
Bridge financing can be great for its short financing terms of between six months and two or three years. This is especially true if your property isn’t in perfect shape right now. A bridge loan can be exactly what you need when stabilizing a property’s occupancy or even doing some significant renovation work.
Fast Closing Times
One of the best things about a bridge loan is how fast you can get it. This type of financing often can close within a couple of weeks. This is a particularly good benefit if you need to close on a sale fast and can’t afford to sit around waiting for a loan to come through.
Asset Based
Most (though not all) bridge loans are non-recourse and use the property’s strength instead of relying on a borrower’s strong credit. This means if you have a less-than-perfect credit history, a bridge loan could be a great option if other credit lines are more limited.
Cons of Bridge Loans
High Interest Rates
Bridge loans generally come along with very high interest rates, relatively speaking. While most of these loans have interest-only payments throughout its life — which can be either a good or a bad thing — higher interest rates generally mean higher payments. Of course, if you’re planning to refinance into a longer-term, permanent loan, these higher monthly costs during the bridge term may not be a deal breaker.
Short Loan Terms
Yes, I know. I said this was an advantage earlier — and it is. However, it can also be a significant disadvantage if you’re not prepared. Because they generally have interest-only payments, bridge loans tend to have very large balloon payments when they mature. If you don’t have financing lined up to replace them, this can get very expensive very fast.
HUD 221(d)(4) Loans
If you are planning to build or overhaul an apartment building and timing is not your primary concern, a HUD 221(d)(4) loan could be exactly what you need. These loans offer the longest, fully amortizing terms in the industry, and they have a fixed interest rate — often lower than most other types of financing. What’s more, they’re even assumable.
Pros of HUD 221(d)(4) Loans
Low, Fixed Interest Rate
It’s absolutely possible to get a HUD loan at below-market interest rates, and with the HUD 221(d)(4) loan, you can lock in that interest rate for the life of the loan. As to the term length, HUD offers the longest in the industry. The term of a HUD 221(d)(4) loan can run for the construction period (of up to three years) plus an additional 40 years — all at a fixed rate.
Available for Most Properties
There’s a fairly common misconception that HUD multifamily loans are only for affordable rental properties. This is not true: The HUD 221(d)(4) loan (along with most other HUD-backed financing) is available for market-rate properties as well. That said, loans for affordable housing developments may have slightly better terms.
Fully Amortizing
HUD loans are fully amortizing. This means no balloon payments, and when you’re done paying the loan, the property is yours, free and clear. It’s generally quite difficult to find fully amortizing loans even for refinances or acquisitions — but to have it in a construction financing package is a very uncommon, competitive feature.
Cons of HUD 221(d)(4) Loans
Lengthy Approval Timelines
The biggest downside is the length of time it takes to get your loan funded. A HUD 221(d)(4) loan can take more than 12 months to close. This delay can put it out of reach for many who may need the funding faster.
Only for Construction
Another downside to a HUD 221(d)(4) loan is that it can only be used for the construction — or significant renovation — of a multifamily property. There’s no way around this: If you’re replacing the flooring in your community, that’s not enough to qualify for this loan. Also, you can’t use them for acquisitions or refinances, no matter what. HUD does offer a popular option, the 223(f) loan, for those looking for low-cost financing to acquire or refinance a multifamily property, though.
Bank Loans
Every bank loan is different. This can be both a good thing or a bad thing, depending on your credit, your property’s fundamentals, and especially which bank you talk to. Some banks and credit unions are keen to finance construction, while others are more comfortable with refinances. It all depends on them — and finding the right bank lender is key.
Pros of Bank Loans
Smaller Amounts
Although many banks — especially larger, national institutions — are fine extending large loans for multifamily assets, they can really shine for smaller properties with lower financing needs.
Relatively Fast Close
A bank loan can usually close pretty fast — generally a bit faster than your average Fannie Mae or Freddie Mac loan.
Flexibility
Every bank may offer different terms, and this can be a benefit — some niche banks may offer the best terms for your specific needs. If high leverage is what you're after, you should be able to find a bank that will offer it. If you are looking for a fully amortizing loan, again, it's probably out there. The trick, however, is finding the lender that ticks all the boxes for you as a borrower.
Cons of Bank Loans
Every Bank Is Different
There are many cons I could list here, but because bank financing is such a diverse place, it makes sense to focus on this. I named it as a pro up above, but it’s not so simple. To get the best loan terms from a bank, you may need to talk to 20 or 30 lenders. Maybe even more. To do that, you’ll likely need to apply using 20 or 30 different forms, all saying roughly the same thing.
Of course, you could let us shop your financing package to those banks for you — just input your details below. And we won’t stop there, either. If a HUD or Fannie/Freddie loan is the best for your situation, we’ll identify and source it, too.
Related Questions
What are the best multifamily loan options for 2023?
The best multifamily loan options for 2023 depend on your specific needs. According to this article, the top 10 multifamily lenders of 2023 are:
- Greystone
- Walker & Dunlop
- CBRE
- JLL
- KeyBank Real Estate Capital
- PNC Real Estate
- Capital One
- Hunt Real Estate Capital
- Wells Fargo
- NorthMarq Capital
These lenders offer a variety of loan products, including fixed-rate loans, adjustable-rate loans, bridge loans, and more. Depending on your needs, you may be able to find a loan product that meets your needs. For example, if you need a loan for a short-term project, you may want to consider a bridge loan. If you need a loan for a longer-term project, you may want to consider a fixed-rate loan. You can also find lenders that offer adjustable-rate loans, which can be beneficial if you are looking for a loan with a lower interest rate.
If you are not sure which loan product is best for you, you can fill out this form to get 10 soft quotes from a wide range of lenders in 24 hours.
What are the advantages of multifamily financing?
The advantages of multifamily financing include better interest rates, longer terms, flexible terms, and higher leverage.
Due to lower risk in the multifamily property sector, loans typically come with lower interest rates than similarly valued properties in other commercial real estate sectors. Banks consider it a less risky investment. Although many multifamily loans are limited to between five and 10 years, some financing types, like HUD loans, offer fully amortizing, long-term options. Due to the wide range of options available, borrowers can often find the terms they’re looking for by shopping around. Multifamily financing typically allows for higher LTV ratios than loans for other commercial real estate assets, like office and industrial buildings.
What are the differences between multifamily and single-family loans?
The main difference between multifamily and single-family loans is the down payment requirements. Single-family loans typically require a down payment of 20-25%, while multifamily loans can require as little as 5-10%. Additionally, multifamily loans offer more financing options, such as Fannie Mae loans, Freddie Mac loans, HUD multifamily loans, bank loans, and CMBS loans. For more information, please see this guide.
What are the qualifications for a multifamily loan?
To qualify for a multifamily loan, borrowers must typically meet certain qualifications, including:
- A good credit score
- A minimum of two years of experience in real estate
- A minimum of two years of experience in the same type of property
- A minimum of two years of experience in the same geographic area
- A minimum of two years of experience in the same type of financing
- A minimum of two years of experience in the same type of loan product
- A minimum of two years of experience in the same type of loan structure
- A minimum of two years of experience in the same type of loan terms
- A minimum of two years of experience in the same type of loan amount
- A minimum of two years of experience in the same type of loan repayment terms
- A minimum of two years of experience in the same type of loan interest rate
- A minimum of two years of experience in the same type of loan collateral
- A minimum of two years of experience in the same type of loan documentation
- A minimum of two years of experience in the same type of loan closing costs
- A minimum of two years of experience in the same type of loan servicing
- A minimum of two years of experience in the same type of loan underwriting
For more information, please visit www.multifamily.loans/multifamily-financing and www.multifamily.loans/apartment-finance-blog/what-is-multifamily-finance-a-beginners-guide.
What are the current interest rates for multifamily loans?
The current interest rates for multifamily loans depend on the loan program and loan purpose. For Fannie Mae and Freddie Mac loans, the interest rate is between 4.95% - 7.05%. For CMBS loans, the interest rate is between 5.30% - 8.30%. For HUD multifamily loans, the interest rate is between 4.09% - 6.59%. For multifamily purchase loans, the interest rate is between 4.95% - 7.05%. For multifamily refinance loans, the interest rate is between 4.95% - 7.05%. For multifamily construction loans, the interest rate is between 5.82% - 13.82%.
You can find more information about multifamily mortgage rates here.
What are the best strategies for securing a multifamily loan?
The best strategies for securing a multifamily loan include being upfront and proactive, preparing to answer tough questions, and getting professional help. It's important to look at your situation and asset from an outside perspective and address any potential complications early and clearly. Professional help can be useful as it can provide access to a larger network and reach. This article provides more information on finding the best multifamily refinance in a recession.